Despite disputes among principal shareholders, New Tirupur Area Development Corporation Limited (NTADCL), a public-private partnership initiative spearheaded by the Tamil Nadu government, has turned the corner reporting operating profits for the last three consecutive years.
NTADCL reported an operating profit of ₹27 crore in 2017-18. It had posted a profit of about ₹2 crore each in 2015-16 and 2016-17. The annual general body meeting of the shareholders will be held on September 25.
This significant turnaround comes in the backdrop of a challenging environment caused by a combination of court ruling on pollution discharge by dyeing units around Tirupur and persisting headwind in the economy.
NTADCL was promoted by Tamil Nadu Water Investment Company Limited (TWIC), Infrastructure Leasing and Financial Services Limited (IL&FS) and Tirupur Exporters’ Association to implement the country’s first water supply and sewage project under public-private partnership. A concession agreement for the project was signed in 2000.
As the project progressed, it attracted assorted investors, including Aidqua Holdings and Life Insurance Corporation of India, among others.
TWIC owned 28.4% equity and Aidqua Holdings (Mauritius) Inc. 24.4% with the balance shared between LIC, General Insurance and others.
A dispute broke out between Aidqua and IL&FS on the management of the company and the firm could not service its debts.
In 2011, a corporate debt restructuring (CDR) plan was floated. The Tamil Nadu government, through its joint venture arm TWIC (where IL&FS is also a shareholder), infused ₹150 crore into the company.
However, Aidqua opposed the CDR proposal and moved the Company Law Board (CLB).
The CLB overruled the objection, and allowed the CDR.
The CLB ruling was contested in the Madras High Court, which wanted the State to notify the prohibition in the usage of ground water for industrial purposes as envisaged by the concession agreement before implementing the CDR. After clearing the glitches in the way and armed with the CLB ruling, NTADCL went ahead with the CDR.
“Keeping the company running was necessary as it was a social project. So, the State decided to infuse the ₹150 crore equity. Now, the company has started making profits and servicing its debt,” according to sources.
Industry sources concede that the proactive role played by the State in the exercise has breathed fresh life into NTADCL and is benefiting the ecosystem around Tirupur.